age 1 of 52
Edexcel A Level Microeconomics FINAL EXAM PREP
2025/2026 COMPLETE QUESTIONS WITH CORRECT
DETAILED ANSWERS || 100% GUARANTEED PASS
<BRAND NEW VERSION>
Factors influencing demand for labour .......Answer.........Demand
for final product - if rise in output > increase in productivity
Relative productivity of labour to capital - substitution effect
UK raises NMW from £7.50 to £7.83
£3,000 subsidy for hiring unemployed 18-24 y.o. = half UK's
youth minimum wage
Factors influencing supply of labour .......Answer.........Cost of
living
,age 2 of 52
Cost of gaining skills
UK uni fees capped at £9,250 per year
Number of workers
UK raises state pension age from 67 to 68
Market failures in labour markets .......Answer.........Geographical
immobility - inability of labour to move from one location to
another
Occupational immobility - inability of labour to move form one
industry to another
Employer monopsony -> wage-setting power -> wage lower
than equilibrium
,age 3 of 52
10% decline in real wages of NHS worker since start of
recession
Solutions to market failures in labour market
.......Answer.........Education and training
Housing market reform
Wage-setting
UK raises NMW from £7.50 to £7.83
Evaluate solutions to market failures in labour market
.......Answer.........If increases elasticity of S(labour) -> lower
wages
If D(labour) if elastic -> min wage will increase unemployment
, age 4 of 52
Explain wage determination in competitive labour market
.......Answer.........Firms are wage takers -> set W where S = D
S(labour) is perfectly elastic -> AC = MC -> max profits at MRP
= MC -> employ Q₁
Positive statement (def.) .......Answer.........Evidence based
statement which can be proven true or false
Normative statement (def.) .......Answer.........Value judgment
which cannot be tested
Scarcity (def.) .......Answer.........Lack of resources to fulfil
everyone's wants and needs
Renewable resources (def.) .......Answer.........Resources which can
be replenished over time
Edexcel A Level Microeconomics FINAL EXAM PREP
2025/2026 COMPLETE QUESTIONS WITH CORRECT
DETAILED ANSWERS || 100% GUARANTEED PASS
<BRAND NEW VERSION>
Factors influencing demand for labour .......Answer.........Demand
for final product - if rise in output > increase in productivity
Relative productivity of labour to capital - substitution effect
UK raises NMW from £7.50 to £7.83
£3,000 subsidy for hiring unemployed 18-24 y.o. = half UK's
youth minimum wage
Factors influencing supply of labour .......Answer.........Cost of
living
,age 2 of 52
Cost of gaining skills
UK uni fees capped at £9,250 per year
Number of workers
UK raises state pension age from 67 to 68
Market failures in labour markets .......Answer.........Geographical
immobility - inability of labour to move from one location to
another
Occupational immobility - inability of labour to move form one
industry to another
Employer monopsony -> wage-setting power -> wage lower
than equilibrium
,age 3 of 52
10% decline in real wages of NHS worker since start of
recession
Solutions to market failures in labour market
.......Answer.........Education and training
Housing market reform
Wage-setting
UK raises NMW from £7.50 to £7.83
Evaluate solutions to market failures in labour market
.......Answer.........If increases elasticity of S(labour) -> lower
wages
If D(labour) if elastic -> min wage will increase unemployment
, age 4 of 52
Explain wage determination in competitive labour market
.......Answer.........Firms are wage takers -> set W where S = D
S(labour) is perfectly elastic -> AC = MC -> max profits at MRP
= MC -> employ Q₁
Positive statement (def.) .......Answer.........Evidence based
statement which can be proven true or false
Normative statement (def.) .......Answer.........Value judgment
which cannot be tested
Scarcity (def.) .......Answer.........Lack of resources to fulfil
everyone's wants and needs
Renewable resources (def.) .......Answer.........Resources which can
be replenished over time
